The use of Privacy Wallets to Launder Cryptoassets Increases, Elliptic Says

Elliptic, a London-based crypto assets risk management solutions provider, recently released a new research about the methods used by criminals to launder proceeds of crime in cryptocurrencies such as Bitcoin, showing that the use of "privacy wallets" by criminals to hide their trail on the blockchain significantly grows.

Tiled "Financial Crime Typologies in Cryptoassets", the research is based on a review of criminal cases, interviews with cryptocurrency compliance professionals, and Elliptic's analysis of blockchain transactions linked to criminality.

The research serves as a comprehensive reference guide for compliance analysts to help them to identify and prevent money laundering and other criminal activity. 

The risk management provider outlined 2 key incidents during 2020:

• July's hack of Twitter, where over 130 high-profile accounts were compromised in order to promote a scam, raised more than $120,000 in Bitcoin,  much of which was subsequently sent through a Wasabi Wallet.

• ​In September over $280 million in cryptoassets were stolen from KuCoin, an Asia-based exchange. Wasabi Wallet was again used to aid in the laundering of these funds.

“As the technology evolves and new regulations come into force, our research shows that criminals are seeking new ways to launder dirty cryptoassets” said David Carlisle, author of the report and Head of Policy and Regulatory Affairs at Elliptic. He adds, “The most significant trend we observed was the increasing use of privacy wallets such as Wasabi Wallet in the laundering process. In 2020 at least 13% of all criminal proceeds in Bitcoin were sent through privacy wallets, which is up from just 2% in 2019”.